New York contractors face a unique challenge that contractors in most other states do not: Labor Laws 240 and 241. These statutes have been called “Scaffold Laws” and are some of the strictest construction-related liability laws in the country. If you’re a contractor working in New York, it’s not just important to understand these laws—it’s critical to make sure your insurance is set up correctly to protect you from devastating financial loss.
In this article, we’ll break down the laws, provide real-world claim examples, explain how liability shifts depending on whether insurance and hold harmless agreements are in place, and show you how your Commercial General Liability (CGL) policy must be structured to ensure you have coverage. Finally, we’ll introduce how BGES Group can help you navigate these complexities when your insurance comes up for renewal.
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Understanding New York Labor Laws 240 and 241
• Labor Law 240 (Scaffold Law):
This law places absolute liability on property owners and general contractors when a worker suffers injury or death from a gravity-related accident, such as a fall from a height or being struck by a falling object. The key point here is that workers do not have to prove negligence. If proper safety devices (scaffolds, hoists, harnesses, ladders) were not provided, the owner and GC are automatically liable.
• Labor Law 241:
This statute relates to maintaining safe construction, demolition, and excavation sites. It requires that specific safety rules and standards be followed. Violations can result in liability for owners and contractors if an injury occurs.
Together, these laws are the backbone of New York’s worker protection system—but they also expose contractors and owners to lawsuits with little defense.
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Example Claims with Insurance and Hold Harmless Agreements in Place
Assume the following structure:
• Building Owner hires a General Contractor (GC).
• GC subcontracts work to several subcontractors.
• Insurance requirements and hold harmless/indemnification agreements are properly in place.
Claim #1: Roofer Falls from Scaffold
A roofing subcontractor’s employee falls from improperly secured scaffolding, suffering severe injuries.
• Under Labor Law 240, the Building Owner and GC are automatically liable.
• Because of the hold harmless agreement, the subcontractor’s insurance steps in to defend and indemnify the GC and Owner.
• The GC’s risk is greatly reduced, and the Owner’s liability is passed downstream.
Claim #2: Falling Object on Masonry Job
A mason’s employee is struck by a falling brick from above.
• Labor Law 240 applies since it’s a gravity-related injury.
• The subcontractor’s insurance and indemnity agreement provide defense for the GC and Owner.
• The GC’s CGL policy is protected from direct payout, keeping losses contained.
Claim #3: Excavation Cave-In
An excavation worker is injured when a trench collapses.
• Labor Law 241 applies because safety standards for excavation weren’t followed.
• The subcontractor’s policy responds due to contractual indemnity.
• The GC and Owner still face involvement but are financially shielded by proper agreements.
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Example Claims with No Insurance or Hold Harmless Agreements
Now let’s imagine the same accidents—but without insurance requirements or indemnity agreements.
Claim #1: Roofer Falls from Scaffold
The roofer’s subcontractor has no insurance and no indemnification agreement.
• The injured worker sues the Owner and GC.
• Without downstream protection, the GC’s and Owner’s insurance must defend and pay damages.
• The GC’s loss history is hit hard, leading to skyrocketing premiums or non-renewal.
Claim #2: Falling Object on Masonry Job
Same falling brick accident—but the subcontractor lacks insurance.
• The Owner and GC are held directly responsible.
• The GC’s CGL policy responds, but the entire judgment may fall on the GC.
• Out-of-pocket exposure is possible if policy limits are insufficient.
Claim #3: Excavation Cave-In
A trench collapse injures a worker, but the subcontractor is uninsured.
• The worker sues both the GC and Owner.
• With no indemnity in place, liability cannot be transferred.
• Both the GC and Owner face multimillion-dollar exposure, with insurance carriers possibly fighting over coverage.
Bottom line: Without proper insurance and hold harmless agreements, the GC and Owner become the ultimate insurers of every subcontractor’s workforce.
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Your Commercial General Liability Policy and Labor Law Coverage
Most New York contractors assume their CGL policy will protect them if a Labor Law 240 or 241 claim arises. Unfortunately, this is not always true. Many policies contain exclusions that strip away coverage for the very claims most likely to happen in New York construction.
To protect yourself, your policy must:
1. Cover Action Over Claims:
These are lawsuits where an injured worker sues the Owner or GC, and the Owner/GC then brings action against the subcontractor. If your policy has an “Action Over Exclusion,” coverage may be denied.
2. Avoid Employee Injury Exclusions:
If your policy excludes injuries to employees or subcontractors’ employees, you could be left paying damages personally.
3. Provide Broad Contractual Liability Coverage:
Limited contractual liability coverage may not respond to indemnity agreements you’ve signed with Owners or GCs. You need full contractual liability coverage so your insurance can defend and indemnify as promised.
In short: If your policy has any of these exclusions—Action Over, Employee Injury, or Limited Contractual Liability—you may have no coverage for a Labor Law claim.
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Why Contractors Choose BGES Group
More and more New York contractors are coming to BGES Group because we know the ins and outs of Labor Law exposure and contractor liability coverage. Unlike “factory-style” agencies that treat clients like numbers, BGES Group offers boutique-level service. We carefully review your policies, spot dangerous exclusions, and make sure your coverage is structured to protect your business—not leave you exposed.
When your policies come up for renewal, don’t just accept what your broker hands you. Labor Law claims are among the costliest exposures in the country. One uncovered claim could bankrupt your business.
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Contact BGES Group Today
BGES Group specializes in New York construction insurance. We know how to protect contractors from the hidden dangers of Labor Laws 240 and 241.
📞 Call Gary Wallach: 914-806-5853
📧 Email: bgesgroup@gmail.com
🌐 Visit: http://www.bgesgroup.com
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